Australian ATO

[stevonz]

Hi,

Moving to Singapore next week to start a contract which should keep me busy for ~3 years.

Although I am on a good package especially with low Singaporean tax rates, I am becoming aware that I cannot just pack up and head off... I am lead to believe the ATO wants a piece of the action.

My circumstances are that I am heading off, leaving the wife and kids back in Oz.  We own a house.  The plan is that they will come across in th next 6-12 months (both kids are receiving medical treatment), and then rent our house...  I have been recruited by a Singaporean company am paid in Singapore.

On the face of it it does appear that while I have a permanent house of residence in Oz the ATO will see me as a resident and assess my foreign income for tax purposes.

Therefore can I claim LAFHA?  If so how does it work?  Is it just sorted at the end of the FY?  Or are there other options to maximise my foreign income??

[Lester25]

Fear not, if you are living permanently in Singapore the ATO won't tax you on the Singapore income. If you still do an Aus tax return you will declare the SGP income which is used to calculate the tax payable on any income you are still receiving in Australia (rent, dividends, etc) - the tax rate you pay on this income will be at the relevant bracket including your overseas income.

[stevonz]

At what point can I declare myself permanent?  This is my fear... and if I cannot until the wife/ kids arrive can I claim LAFHA?

[Taxyear]

I think it depends on how many days of the tax year you are in Australia for.

[HR Guy]

Once you are out of the country for more than 90 days you are declared a non resident citizen. You will have to pay tax on any earnings in Australia such as property, tax etc but any income earnt in Singapore will not be taxable. Even if you were a taxable resident of Australia, they do not tax you on Singapore income so you have absolutely no concerns with regards to taxation. Again Australia is very reasonable and only tax you on earnings in Australia (the U.S tax you for earnings outside of the U.S)

[correct]

HR Guy is correct. For most of us, it just means we have to pay tax on the rent we receive for our house, nothing else.

[stevonz]

Ok - thanks! 

The accountant I was talking to said I needed a ruling from the ATO and could he have $2800 for the privilige... just scare-mongering/ profiteering??

Anyways arrived here Sunday, started yesterday & had my EP approved today.  Now to find a house.

[Kubes.SG]

Stevenz, the situation is not as simple as HRGuy or Correct seem to think. 

The socialist Govt in Australia passed legislation that came into effect on July 1 2010 that meant that all Aussies who are not deemed as non-residents will be fully taxed on their worldwide income.  In the past, income earned outside of Australia did not need to be declared as a resident, or if tax was paid locally, ATO would not tax you in Aust..  To be a non-resident, you must leave Aust for a minimum of 2 years and severe your connections - ie no home there with you wife and kiddies living in it. 

The socialist Rudd and Gillard Govts hated the fly-out-fly-in off-shore oil and gas workers from Aust who could be out of Australia for 183 days and pay no tax.  Like everything this retarded Govt does they rushed legislation without consultation meaning that hundreds of thousands of Aussies who travel and work outside now have to declare their income and will be taxed on those earnings in Aust.  So the Aussie backbacker pulling beers in a London pub for 18 months will be taxed there, and taxed in Australia.

Until your wife and kiddies move to SG, you will likely have to declare your SG income and be taxed in Aust.

Did you vote Labor? 

[Fan of Gillard]

Kubes,

None of your bloody business who Stevenz voted...!

[HR Guy]

Oh dear Kubes, seems you have not kept up to date. I was specifically trying to keep it simple so there wasn't the need for a detailed outline. What you fail to recognise is that Australia and Singapore have a double tax treaty and as such if taxed in Singapore, Australia will tax credit you to ensure you don't get taxed again. So whilst being a resident for tax purposes in Australia means declaring it, the tax credit will enable payment not to be required.

Protocol with Singapore

The protocol to the comprehensive taxation agreement with Singapore makes a number of amendments to the existing agreement signed in 1969.

The protocol terminates, with effect in respect of relevant dividends paid after 11 March 1988, a provision of the existing comprehensive agreement under which Australia is required to provide a rebate of tax for dividends paid to an Australian company by a Singapore company in which the Australian company has a 10 per cent or greater interest. Foreign tax credit relief will apply in Australia in relation to such dividends derived after 11 March 1988 in accordance with the general foreign tax credit provisions of the Australian law.

This result is achieved under the protocol by replacement of the article of the existing agreement which provides for the country of residence of the recipient of income to relieve the incidence of double taxation with respect to income which, under the agreement, may be taxed by both countries. Under the replacement article, where the recipient of such income is an Australian resident, tax credit relief is to be provided by Australia in accordance with Australia's general foreign tax credit system.

From ATO
That replacement article also provides for Australia to give " tax sparing" credit relief for Singapore tax forgone under certain development incentives currently provided by Singapore. Australia will provide such relief by treating as paid for foreign tax credit purposes the Singapore tax forgone. An exchange of Notes which took place at the time the protocol was signed will extend to 30 June 1987 the operation of tax sparing provisions of the existing comprehensive agreement (which generally ceased to apply from 30 June 1984).

[Lester25]

I am not sure the tax treaty helps much since Singapore tax is much lower than Australian tax.

Kubes is right that if you are a resident of Australia for tax purposes you are now potentially liable for taxation on your worldwide income, with a few exceptions. The safest option is to declare yourself non-resident for tax purposes, in which case you are only liable for tax on Australian sourced income.

The ATO has a self-declaration approach so you can declare yourself non-resident and this would only be an issue in the unlikely event that you are audited and the ATO determine that you are in fact resident for tax purposes.

The general rule is that you are non-resident if you are outside Australia for more than half of the tax year, with a few other factors also taken into account.

You can find more details on the Non-Resident vs Resident for Taxation situation here. The example of "Bronwyn" seems the closest to your situation

http://www.ato.gov.au/individuals/content.aspx?doc=/content/36280.htm

[stevonz]

@kubes - a kiwi living in Oz until this week... so no vote either way.

thanks guys.  i'll see about this self-dclaration and ride the wave...

[Kubes.SG]

Here is an Article from last year.  The result and uncertainty has turned out to be as diabolical as predicted.  Sorry HRGuy you are the one out of date.

http://www.theaustralian.com.au/business/opinion/expat-tax-changes-create-more-uncertainty/story-e6frg9if-1225832747744

[SPGee]

Make sure u start putting money aside for when ur wife finds you cheating with a LBFM or LYFM

[HR Guy]

Here is an Article from last year.  The result and uncertainty has turned out to be as diabolical as predicted.  Sorry HRGuy you are the one out of date.

http://www.theaustralian.com.au/business/opinion/expat-tax-changes-create-more-uncertainty/story-e6frg9if-1225832747744

Relying on a newspaper article? Are they really the most reliable form of information or fact?
The waters are muddy in the area, certainly not as clear cut as some would have you believe.
Agree with your approach. Lets hope your wave works!